\n But sentiment has since changed. The cryptocurrency is down almost 30% this year and lower by more than 6% since Trump took office. Meanwhile, the S&P 500 is up nearly 10% this year and 30% since Trump\u2019s second term started.\n <\/p>\n
\n The eight-month malaise since bitcoin\u2019s last record high has pushed some investors to sell their holdings, while others are reassessing the role crypto can play in a portfolio. BlackRock\u2019s flagship bitcoin ETF saw daily net outflows every trading session from May 15 to June 3, according to data from Farside Investors.\n <\/p>\n
\n Bitcoin rallied at the start of the war with Iran in late February, prompting analysts to consider whether it would regain its status as a kind of digital gold, or hedge against uncertainty. But the crypto has since given up those gains.\n <\/p>\n
\n Meanwhile, US stocks rebounded from an initial war-related slump and have hit a string of record highs<\/a>. Actual gold is flat this year but up 60% since Trump took office.\n <\/p>\n \n \u201cI think bitcoin has lost the plot,\u201d Mark Cuban, entrepreneur and \u201cShark Tank\u201d investor, said on the \u201cFront Office Sports\u201d podcast in May. Cuban, who said he\u2019s sold most of his holdings in the cryptocurrency, added: \u201cIt\u2019s not the hedge that I expected it to be, and that was really disappointing.\u201d\n <\/p>\n \n Bitcoin has yet to regain its footing since a flash crash<\/a> on October 10 sparked billions of dollars in liquidations. Since the crash, bitcoin hasn\u2019t recovered while other assets like stocks and gold have outperformed. A combination of other factors has since added to the pressure.\n <\/p>\n \n The broader crypto industry has felt the slump. Shares of Coinbase (COIN<\/a>), a crypto exchange, are down about 30% this year.\n <\/p>\n \n Enthusiasm about artificial intelligence has ramped up in recent weeks, drawing focus away from cryptocurrencies, analysts say. The excitement surrounding mega IPOs like SpaceX<\/a>, Elon Musk\u2019s rocket and satellite company that also has an AI business, might be replacing the hype around crypto.\n <\/p>\n \n \u201cA lot of speculative money may be selling bitcoin and chasing AI,\u201d said Jonathan Bier, CEO at Farside Investors.\n <\/p>\n \n Another factor: Uncertainty about inflation and the Federal Reserve\u2019s path for interest rates. Hot inflation reports and strong jobs data are prompting some traders and economists to shift expectations to higher rates for longer.\n <\/p>\n \n Nerves about higher rates and a more restrictive monetary environment are putting pressure on crypto, said Gerry O\u2019Shea, head of global market insights at Hashdex Asset Management.\n <\/p>\n \n \u201cCrypto tends to do better when there\u2019s more liquidity in the system and a lower rate environment, and so there\u2019s uncertainty around that,\u201d O\u2019Shea said.\n <\/p>\n \n During a downturn, traders who borrowed money to bet on bitcoin can have their positions automatically closed by exchanges if losses get too steep. These liquidations can exacerbate downturns, said Ryan Rasmussen, head of research at Bitwise Asset Management.\n <\/p>\n \n Nearly $2.5 billion worth of long positions on bitcoin were liquidated over a five-day period at the start of the month, according to CoinGlass data compiled by Bitwise.\n <\/p>\n
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